It is estimated that only 30% of Americans have a basic estate plan (a Will). I find this surprising since Wills are easily obtained and relatively inexpensive. After years of assisting Colorado families in creating estate plans – and seeing the chaos that can occur when there is no plan – I remain amazed that anyone would fail to plan for the inevitable.
Nevertheless, in meeting with prospective clients I'm often told they delayed having a Will drafted simply because they "never got 'round to it" - which probably translates to "I don't want to think about dying." A second reason frequently voiced for delay in estate planning is that they've been "too busy." Apparently a day at the ballpark or local mall trumps protecting the family's future. In fact one of my clients told me that creating an estate plan is "... about as exciting as buying tires for my car."
I get that, but a recent case in the Denver Probate Court points out the importance of having a Will even if your estate is relatively small. In that case Isaac Tyler died leaving three adult step-children whom he had raised but never adopted; a $160,000 home; and no Will.
After Isaac's death two of the step-sons (Spencer and Tyrone) argued over whether the house should be sold. As a result, Spencer, who wanted to sell the home, quit making the mortgage payment and the house wound up in foreclosure.
Shortly thereafter an investor approached Spencer and offered him $5,000 in cash plus an additional $7,000 when the house was sold. In return he had Spencer sign several documents (without proper notarization), one of which fraudulently identified Spencer as Isaac's sole son and the administrator of Isaac's estate.
About that same time another investor offered to pay $145,000 for the house. When Tyrone declined, that investor located four possible heirs, who then laid claim to Isaac's estate.
To no one's surprise the matter wound up in the Denver Probate Court where Judge Leith ruled that the sale to the investor was fraudulent and thus void.
What are the lessons to be learned?
First, the entire matter could have been avoided if Isaac had left a Will naming his step-sons as his beneficiaries.
Second, while the Court ruled that Isaac's step-sons were his heirs, that is a bit of a stretch. Under Colorado law if you die intestate , i.e. without a Will, your estate will be distributed to your closest living relatives even if you never heard of them. While Judge Leith chose to carry out Isaac's purported intent – a wise and equitable decision under the circumstances – it makes more sense to eliminate all doubt by obtaining a Will. That will negate the chance of probated litigation and that a "shirt-tail relative" will wind up with your estate.
Third, if you inherit real property, including mineral rights, the estate must be probated; you can't just sign paperwork provided by an "investor." Contrary to what an "investor" may claim, there is no "magic" means of avoiding probate. Simply stated no title company will insure the title and no lender will approve a loan to purchase the property unless there is a clear chain of title and that requires a legal transfer of the property from the court appointed personal representative or a court order authorizing the sale.
Fourth, there are a lot of unscrupulous "investors" that would like to separate you from your rightful property for mere peanuts. Don't be a victim – consult with an experienced estate planning attorney and create an estate plan that reflects your objectives and protects your heirs.